ITO 1(3)(1), MUMBAI V. READY MIX CONCRETE LTD, MUMBAI

ITA 1731/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1884 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Assessee Lawyers: D H SHAH
• Keywords: Business income; Difference of opinion
• Section: 27; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , !' , # , $ BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I .T.A. NO.1731/MUM/2014 ( # % &% / ASSESSMENT YEAR: 2005-06) I.T.O. 1(3)(1) ROOM NO. 541, AAYAKAR BHAVAN, MUMBAI - 400020 / VS. M/S. READY MIX CONCRETE LTD. 4 TH FLOOR, 32-34, VEER, NARIMAN POINT, FORT, MUMBAI 400 001 ./ ./ PAN/GIR NO. : AACCR2563G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI D.H.SHAH DEPARTMENT BY: SHRI JAYANT KUMAR / DATE OF HEARING: 03.09.2015 /DATE OF PRONOUNCEMENT: 16.12.2015 ! / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 20.11.2013 PASSED BY THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX (APPEALS)-2, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT (A)] DATED 20.11.2013 FOR ASSESSMENT YEAR A.Y. 2005-06. WHEREIN THE LEARNED CIT(A) DELETED THE PENALTY OF RS.3,26,588/- LEVIED BY THE ASSESSING OFFICER U/ S. 271(1)(C) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING EXPORT-IMPORT, CONVERSION, ALTER OR OTHERWISE DEALING IN READY MIX CONCRETE, C ONCRETE PIPES, BEAMS, SLABS ITA NO.1731/MUM/2014 ASSESSMENT YEAR: 2005-06 2 AND OTHER PRODUCTS FOR BUILDING AND CONSTRUCTION IN DUSTRY. THE ASSESSEE HAS LEASED THE PROPERTY AT GUJARAT AND DECLARED THE SAM E UNDER THE HEAD BUSINESS INCOME. HOWEVER, THE ASSESSING OFFICER ASSESSED T HE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE SAME RESULT ED IN ADDITION TO ALLOW THE LEVY OF IMPUGNED PENALTY. THE LEARNED CIT(A) DELET ED THE PENALTY BY HOLDING THAT IT HAS BEEN LEVIED ON ACCOUNT OF CHANGE OF HEA D OF INCOME AND THERE IS NO CONCEALMENT OF PARTICULARS OF INACCURATE OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED CIT(A) ALSO RELIED ON DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD.[2010] 322 ITR 158. AGGRIEVED THIS REVENUE HAS FILED THIS APPEAL. 3. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S. SUPERB ROYAL TRAVEL S AND TOURS PVT. LTD. (ITA NO. 4147/M/12) DATED 15.01.2014 WHEREIN PENALTY LEV IED HAS BEEN DISALLOWED WITH THE FOLLOWING OBSERVATIONS: 8. BEFORE US, THE AR SUBMITTED THAT NEITHER THIS WA S A CASE OF CONCEALMENT OF PARTICULARS OF INCOME NOR THE CASE O F FURNISHING OF INACCURATE PARTICULARS OF INCOME AND NOR IS A CASE WHERE THE A O HAS INFERRED A FINDING, WHICH WOULD ATTRACT PENAL PROCEEDINGS. THE AR ALSO SUBMITTED THAT PENALTY CANNOT BE LEVIED ON A CHANGE OF HEAD OF INCOME OR W HERE THE CLAIM OF THE ASSESSEE IS NOT ACCEPTED BY THE REVENUE AUTHORITY. THE AR CITED THE FOLLOWING DECISIONS FROM THE VARIOUS FORA: 1. RELIANCE PETROPRODUCTS VS CIT 322 ITR 158 (SC): MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW DOES NOT ATTRACT PENALTY UNDER SECTION 271(1)(C). 2. CIT VS INDERSONS LEATHER P. LTD. 328 ITR 167 (HO NBLE P&H HIGH COURT): THERE CANNOT BE ANY PENALTY WHEN THE AO TREATS RENT AL RECEIPT UNDER A DIFFERENT HEAD. 3. M/S EUROLINK TRADING P. LTD. VS INCOME TAX OFFIC ER-9(1)(3) [ITAT J BENCH, MUMBAI ITA NO. 2925/MUM/2010(AY: 2004-05 ): THERE CAN BE GENUINE DIFFERENCE OF OPINION IN APPRE CIATING THE PRINCIPLES OF LAW BUT IT DOES NOT MEAN THAT THE ASS ESSEE DELIBERATELY TRIED TO CONCEAL THE INCOME. UNDER THE FACTS OF THE PRESENT CASE THERE IS NO SCOPE FOR CONSIDERING THAT THERE IS CONCEALMENT OF INCOME. IN THE SAME WAY, THERE IS NO CASE FOR FURNISHING INACCURAT E PARTICULARS AS ALL ITA NO.1731/MUM/2014 ASSESSMENT YEAR: 2005-06 3 THE DETAILS INCLUDING THE AGREEMENT WERE PLACED ON RECORD. THEREFORE, WE HAVE NO HESITATION IN CANCELING THE PENALTY. 4. DHANANJAY V. GUPTA, MUMBAI VS DEPARTMENT OF INCO ME TAX ON 8 MAY, 2013 [ITA 3719/MUM/2011]: IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD MA DE A CLAIM WHICH WAS NOT ACCEPTED OR ACCEPTABLE TO THE REVENUE, THAT BY ITSELF COULD NOT ATTRACT THE PENALTY U/S 271(1)(C). AS NOTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDERS IN THIS REGARD, FULL DISCLOSURE WAS MADE BY THE ASSESSEE REGARDING THE NATURE OF HIS M/S SUPERB ROY AL TRAVELS AND TOURS PVT LTD ITA NO. 4147/MUM/2012 3 INCOME WHICH WAS ALSO REFLECTED IN THE CERTIFICATE ISSUED BY THE EMPLOYER . EVEN THE GENUINENESS OF THE EXPENDITURE CLAIMED TO BE INCURR ED BY THE ASSESSEE FOR EARNING COMMISSION INCOME ETC. WAS NOT DOUBTED BY THE AO. THE ASSESSEE THUS CANNOT BE SAID TO BE GUILTY OF FURNIS HING INACCURATE PARTICULARS OF HIS INCOME AS HELD BY THE HONBLE SU PREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD. (SUPRA) AND THE CORRESPONDING ADDITION MADE TO HIS TOTAL INCOME BEING MERELY THE RESULT OF CHANGE OF HEAD OF INCOME, WE FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(A) THAT IT WAS NOT A FIT CASE TO IMPOSE PENALTY U/S 27 1(1)(C). WE THEREFORE UPHOLD THE ORDER OF THE LD. CIT(A) CANCELING THE PE NALTY IMPOSED BY THE AO U/S 271(1)(C). 5. M/S CROWN TRADELINK PVT LTD VS ASST. CIT (ITA NO . 2768/AHD/2012] 2768/AHD/2012]: THE ADDITION WAS MADE MERELY BECAUSE OF A CHANGE IN THE HEAD OF INCOME. IN THE ABSENCE OF INACCURACY IN THE BOOKS O F ACCOUNTS OR CONCEALMENT OF FACTS, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. 6. DY. CIT VS JMD ADVISORS PVT. LTD. (08.02.2008 ITAT DELHI): A MERE CHANGE OF HEAD OF INCOME BY THE AO IN THE AS SESSMENT CANNOT BE CONSTRUED AS CONCEALMENT AS ENVISAGED IN SEC. 27 1(1)(C) SO AS TO ATTRACT THE PENAL PROVISIONS CONTAINED THEREIN. 7. SABARA IMPEX LIMITED C/O. G.P. MEHTA AND CO. VS INCOME TAX OFFICER (05.10.2011 ITAT MUMBAI): IN CASE, AS A RESULT OF THE RELATED ADJUSTMENT, THE RE WAS NO CONCEALMENT OF INCOME, BUT ONLY CHANGE OF HEAD, CLE ARLY THERE COULD NOT BE AN OCCASION TO IMPOSE CONCEALMENT PENALTY U/ S 271(1)(C). 8. PFIZER PHARMACEUTICALS VS DCIT 49 DTR (MUM)(TRI) 16: NO PENALTY CAN BE LEVIED FOR MERE CHANGE IN THE HEA D OF INCOME. 9. CIT VS SHYAM TEX INTERNATIONAL LTD. [43 DTR (DEL )19]: NO PENALTY CAN BE LEVIED FOR MERE CHANGE IN THE HEAD OF INCOME . 10. INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD. VS DY . CIT 42 SOT 325: A LEGAL CLAIM PER SE, RIGHT OR WRONG, CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA NO.1731/MUM/2014 ASSESSMENT YEAR: 2005-06 4 11. CEMENT MARKETING CO. OF INDIA LTD VS AST. CST 1 980 124 ITR 15 SC CIT V. AHMED TEA CO. (P) LTD. (1978) 113 ITR 74 (GA U) ADL. CIT V. SAWAN MOTOR STORES 109 ITR 660 (AP) UNLESS THE FILING OF RETURN IS ACCOMPANIED BY A GUI LTY MIND, PENALTY U/S 271(1)(C) CANNOT BE LEVIED. 12. VEEJAY SERVICE STATION V ASST. CIT 112 TTJ 824 (DELHI): WHERE ASSESSEE HAD DISCLOSED COMPLETE FACTS BEFORE AO AND IT HAD ADOPTED A PARTICULAR COMPUTATION OF THE CAPITAL GAI N WHICH DID NOT NEED APPROVAL OF AO THAT WOULD NOT MEAN THAT ASSESS EE HAD FURNISHED INADEQUATE PARTICULARS. 13. WHERE THE ADDITION IS MADE ON THE BASIS OF DIFF ERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE, PENALTY U/S 271(1) (C) CANNOT BE LEVIED. ITO VS. OASIS SECURITIES LTD (2010) 37 SOTR 63 CIT (CENTRAL) LUDHIANA VS. SANITARY IMPROVEMENT & T ILES MFG. CO. 133 ITR 334: 9. THE AR, THEREFORE, PLEADED THAT NO PENALTY IS EX IGIBLE ON THE GIVEN SET OF FACTS AND PLACED RELIANCE ON THE ABOVE DECIS IONS. 10. THE DR, RELIED ON THE ORDERS OF THE REVENUE AUT HORITIES. 11. WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED TH E FACTS AND THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS CITED BEFORE US. AT THE OUTSET, IT IS A MATTER OF FACT THAT THE ASSESSEE WA S CLAIMING INCOME UNDER ONE HEAD AND THE REVENUE AUTHORITIES ASSESSED THE ASSES SEE UNDER A DIFFERENT HEAD. IN SO FAR AS FURNISHING OF PRIMARY MATERIAL, THERE WAS NEITHER ANY DISPUTE, NOR AN ADVERSE ALLEGATION. THE M/S SUPERB ROYAL TRAVELS AND TOURS PVT LTD ITA NO. 4147/MUM/2012 4 ONLY DISPUTE IS THAT THE REVENU E AUTHORITIES TREATED THE INCOME NOT FROM RENT BUT FROM HOUSE PROPERTY, THIS BY ITSELF CANNOT FORM THE BASIS FOR THE LEVY OF PENALTY, AS HELD BY THE ABOVE MENTIONED DECISIONS AND OTHER CATENA OF DECISIONS ON THE ISSUE OF CANCELLAT ION OF PENALTY, WHEN THE REVENUE AUTHORITIES CHANGE THE HEAD OF INCOME. 12. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE ARE OF THE OPINION THAT UNDER THE GIVEN SET ASIDE CIRCUMSTANCES, PENAL TY IS NOT EXIGIBLE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE AO TO CANCEL THE PENALTY. 4. FOLLOWING THE ABOVE SAID ORDER WE ARE OF THE VIE W THAT IT IS NOT JUSTIFY IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFIC ER. ITA NO.1731/MUM/2014 ASSESSMENT YEAR: 2005-06 5 5. IN RESULT THE APPEAL OF THE REVENUE IS HEREBY DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2015 SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) / ACCOUNTANT MEMBER #$ /JUDICIAL MEMBER % & MUMBAI; ' DATED : 16 TH DECEMBER, 2015 MP MP MP MP ' ( )# !* +*& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ( ) / THE CIT(A)- 4. ( / CIT 5. )*+ $$,- , ,- , % & / DR, ITAT, MUMBAI 6. +./ 0 / GUARD FILE. ' / BY ORDER, ) $ //TRUE COPY// , / ' (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI